Equatorial Leans Against Bidding on Copasa Privatization

(Bloomberg) -- Equatorial SA is unlikely to bid on a key stake in Copasa, the Brazilian water utility that’s being privatized by the government of Minas Gerais state, according to people familiar to the matter.  

Utility conglomerate Equatorial had planned to bid jointly with water treatment company Sabesp to become a strategic investor in Copasa, the people said. But Sabesp pulled out earlier this week, and after days of consideration, Equatorial is seriously considering giving up on participating, the people said. Equatorial will have a meeting on Monday to make a final decision. 

Companies have until May 25 to bid, according to the official privatization schedule.

Equatorial, which owns a stake in Sabesp, said it is “always attentive to opportunities in its areas of operation, but does not comment on potential business deals or acquisitions.”

Itausa SA, the Singapore sovereign wealth fund GIC and Equipav Saneamento SA are planning to jointly bid in the privatization process for Copasa, people familiar with the matter said earlier today. The three firms are shareholders in Aegea Saneamento e Participacoes SA, which is going to participate in the bidding with a minor stake to avoid increasing its debt load, the people said.

Copasa’s formal name is Cia. de Saneamento de Minas Gerais. Under the privatization plan, Copasa’s control will be sold in a public offering in which Minas Gerais state could retain no more than 5% of the company, the company said in a filing. It now holds 50.03%, according to the firm’s website. Only the state will sell shares in the offering, and it may retain a so-called golden share, which grants its owner some veto rights. 

A “reference/strategic investor” will be able to buy 30% of the company before the public offering, with the possibility for the same investor to buy more shares in the market during the public offering with a maximum of 45% of voting rights, according to the filing. 

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